Politicsobama sequestersequestration 2013sequester-congress

Sequestration Cuts Will Be Avoided By Congress As Obama Claimed, Senator Mark Warner Says

Key Democrat Backs Obama On Surprise Debate Claim
Reuters
|
Open Image Modal
Mark Warner, D-Va., speaks to the media on Capitol Hill in Washington, Tuesday, Aug. 2, 2011, after the Senate voted to pass debt legislation. (AP Photo/Jacquelyn Martin)

By Jonathan Spicer

NEW YORK, Oct 23 (Reuters) - A U.S. senator pushing to find a solution to automatic, across-the-board government spending cuts at the beginning of next year said on Tuesday he believes the so-called "sequestration" will ultimately be avoided.

"I do believe that we will avoid sequestration," said Mark Warner, a Democratic senator from Virginia.

He and Republican Senator Saxby Chambliss are leading the "Gang of Eight" talks aimed at avoiding the spending cuts embedded in the so-called fiscal cliff on Jan. 1. The cliff, which lawmakers have little time to avoid, includes big spending cuts and tax increases that in combination are expected to push the United States into recession.

The pair were speaking at a financial markets conference in New York a day after President Barack Obama caught Capitol Hill by surprise when he said that automatic spending cuts "will not happen," in his third and final debate with Republican challenger Mitt Romney.

"This was certainly news to us," Chambliss said of Obama's comment. "I can tell you it sent waves around Washington."

The chances of a comprehensive legislative solution to the cliff problem before Jan. 1 are considered slight and members of Congress have been looking for some temporary fix to buy time once a new Congress and a new or re-elected president are sworn in in January.

The Gang of Eight senators want to put Congress in a position to deal with sequestration in the 30 days or so that it will have between the Nov. 6 election and the end of the year, Chambliss told the conference hosted by the Securities Industry and Financial Markets Association.

"I wish we could walk in here and tell you that we have a silver bullet," he said. "But it is going to be a very tough political slugfest in that period of time."

The spending cuts and tax hikes could take an estimated $600 billion out of the U.S. economy and push it into recession next year, according to the non-partisan Congressional Budget Office.

The spending cuts were mandated by Congress as part of a deal to raise the debt ceiling for federal borrowing last year. At the time, the assumption was that they would be replaced in a more deliberative way by a super-committee, which failed in its efforts.

Warner and Chambliss have been working on a bipartisan solution for more than two years. In recent months, the uncertainty has spooked financial markets.

"This is a challenge ... that is going to require both sides," Warner said. "It's going to require extra revenues, it's going to require entitlement (cuts)."

Simply putting off the hard decisions on spending would be a mistake, he added. "I think a complete punt would be awful."

Our 2024 Coverage Needs You

As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.

Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.

to keep our news free for all.

Support HuffPost

Before You Go

Economic Predictions That Were Blatantly Wrong (Or Have Blatantly Yet To Come True)
Paul Ryan: QE2 Risks Inflation(01 of12)
Open Image Modal
Back in 2010, Republican Vice Presidential candidate Paul Ryan explained that the Federal Reserves plan to purchase $600 billion worth of securities -- known as QE2 -- was little more than "sugar-high economics" that risked rising inflation and weakening the dollar. But instead the opposite took place. According to Bloomberg:
"Since that prediction by Ryan, who has been chosen by presumptive Republican presidential nominee Mitt Romney to be his running mate, the dollar has risen against major currencies and inflation has stayed below the Fed's goal of 2 percent."
 (credit:AP)
Christina Romer: Unemployment Will Remain Below 8%(02 of12)
Open Image Modal
In early January of 2009, Christina Romer, economic adviser to then President-elect Barack Obama, made a prediction: massive government stimulus on the order that would eventually be passed by Congress would keep unemployment below 8 percent, reports The Washington Post. Without it, unemployment could reach as high as 9 percent.In July 2012, unemployment edged up to 8.3 percent. It has not gone below 8 percent since January 2009. (credit:AP)
Jim Cramer: Obamacare Will Topple The Stock Market(03 of12)
Open Image Modal
On March 18, 2010, Jim Kramer stated on Larry Kudlow's program that Obamacare would tank the stock market. The reform package was, in his words, "the single greatest impediment to the stock market going higher."On March 23 of that year, according to CBS News, President Obama signed health care reform into law. Following Yahoo's tracking of the Dow Jones, the market on April 1 2010 was at 10,927. On August 17, over two years later, the Dow Jones Industrial Average was pegged at 13,264. Granted, the market could still take a nose dive. But odds are it won't be because of health care reform. (credit:AP)
Michelle Bachmann: Obama Taking 'The Final Leap To Socialism'(04 of12)
Open Image Modal
In a radio interview Minnesota Congresswoman Michelle Bachmann gave with Bill Bennet in March of 2009, the Minnesotan claimed that Obama's policies were representing the "final leap into socialism," Think Progress reported.But alas, while Bachmann's sensational claim may have gotten her into the spotlight, the government has been engaged in selling its stake in the industries that it had to temporarily prop up.General Motors, an automaker that the U.S. government had to prop up with emergency capital, bought back all preferred shares held by the U.S. Treasury as of December 2010, reports The New York Times.Wall Street's largest banks that have frequently brought about wrath from liberals such as Paul Krugman, like Citi, Goldman Sachs and JP Morgan, are still privately run. (credit:AP)
Glenn Beck: U.S. Will Go Through 'Great Depression Times 100' (Or Hyperinflation)(05 of12)
Open Image Modal
In early 2010, then-Fox News commentator Glenn Beck said that the U.S. was likely in for a "Great Depression Times 100," reports Media Matters, going on to say that the country would experience a period of hyperinflation.Unemployment during the Great Depression peaked at around 25 percent, according to an article published by the Bureau of Labor Statistics. But even at the worst moments of the Great Recession, unemployment only reached slightly above 10 percent. Presently, it is at 8.3 percent, according to the Bureau of Labor Statistics. With inflation estimated to remain stagnant at 1.5 percent through 2012, the nightmare warnings of hyperinflation expounded by Beck as well as by renowned "economist" Peter Schiff appears to be just that. A nightmare. (credit:AP)
Rick Santelli: 'Stagflation Is Almost A Certainty'(06 of12)
Open Image Modal
In October of 2009, CNBC analyst and Tea Party founder Rick Santelli told said on the show Fast Money that he believed "stagflation is almost a certainty." In other words Santelli was predicting that America would go through a period of high inflation and high unemployment. The only question he had was when.In November of that year, the Bureau of Labor Statistics revealed that between October 2008 and October 2009, prices rose by 1.7 percent not including food and gas. This made, at the time, Santelli's claim even bolder. Even though unemployment is still high -- almost three years later -- inflation has risen far below the Federal Reserves 2 percent annual target, Bloomberg reports. (credit:Getty Images)
Rush Limbaugh: Obamacare Will Leave 250 Million People Uninsured(07 of12)
Open Image Modal
Among the many predictions conservative radio host Rush Limbaugh has made over the years, the one he made on March 8, 2010 was not one of his best.On his daily radio show The Rush Limbaugh Show, Limbaugh announced to his listeners that healthcare reform, which would be signed into law later that month, would end up leaving 250 million Americans uninsured, Media Matters reported.As of June 2012, 49.9 million Americans do not have health insurance, CNN estimated. (credit:AP)
Mitt Romney: U.S. WIll Default If We Raise Debt Ceiling(08 of12)
Open Image Modal
In the June 13, 2011 Republican Presidential Debate, Mitt Romney, when asked about the consequences of not raising the debt limit answered the moderator's question with a question. "Well, what happens if we continue to spend time and time again, year and year again more money than we take in?"As Asher Smith pointed out on The Huffington Post, this can only mean that the U.S. will eventually be unable to pay off its obligations and, as a result, default.Bit as of August 2012, close to one year after the debt ceiling was raised, the U.S. still hasn't defaulted. (credit:AP)
Bill Gross: End Of QE2 Would Cause Bond Yields To Go 'Much Higher'(09 of12)
Open Image Modal
In March of 2011, PIMCO Co-Founder Bill Gross predicted an imminent spike in treasury bond yields following the end of the Federal Reserve's Quantitative Easing program, Fortune's Colin Barr reported.Bond yields, Gross told reporters, were likely to go "higher maybe even much higher" at the end of June 2011 when QE2 ended. The 10-year treasury bond yield has since fallen. Since the 2011, 10-year bond rates have hovered between 2.5 and 1.5 percent, according to Bloomberg.
Joe Biden: US Out Of Recession In 18 Months (Feb. '09)(10 of12)
Open Image Modal
In February of 2009, Vice President Joe Biden predicted that the federal stimulus package being implemented by Barack Obama's administration would "literally drop kick us out of this recession," The Hill reported. "This [stimulus] is about getting this out and spent in 18 months to create 3.5 million jobs."Technically, the recession ended during the third fiscal quarter of 2009, according to the Bureau of Economic Analysis. But with unemployment hovering around over 8 percent for the last three years, some economists are no longer talking about calling the current economic period a recovery. Brad DeLong, an economist with UC Berkley, told readers on his blog in 2011 that we're now in the midst of a "Little Depression" instead.
Peter Schiff: Inflation At 20 Percent By 2009(11 of12)
Open Image Modal
Economist Peter Schiff stated that the Federal Reserves monetary policies would lead to 20 percent inflation within one year. The statement, made in October 2008 on Glenn Beck's former CNN program, was proven wrong. During 2009, the U.S. actually experience deflation. (credit:AP)
Ron Paul: Beware Of Runaway Inflation(12 of12)
Open Image Modal
Congressman Ron Paul believed that runaway inflation was "just horrendous" in May 2011, he said during an appearance on Fox Business News. When Congressman Paul made that statement, inflation was pegged at 3.2 percent and, after peaking at 3.9 percent that October, inflation has steadily fallen to 1.4 percent in July 2012. (credit:AP)
Suggest a correction
|
Submit a tip